United States

Offshore wind bid in with a chance -- Delaware mandate

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At the end of the month, a special combination of Delaware government agencies will decide where the state will get 400 MW of new power over the next 25 years. The decision comes down to a natural gas plant, a coal plant of barely commercialised design, and a vast 600 MW offshore wind project.

The procurement process is hardly customary for a power plant bid in the US, but neither was last year's 69% rate increase from Delaware's major electricity provider, Delmarva Power & Light (DP&L). When natural gas prices spiked, DP&L was forced to pass the cost on to ratepayers, a corollary of its aversion to signing power purchase agreement (PPA) contracts for more than a three year period. A consumer backlash ignited a response from state lawmakers resulting in the creation of a new Delaware law forcing the utility to secure 400 MW through a 25 year PPA.

The offshore bid was submitted by Peter Mandelstam of Bluewater Wind. To give the decision makers some options to choose from, Bluewater presented detailed bids for three 600 MW plants, one in the Delaware bay, and two others out in the Atlantic Ocean. Any excess power from the plant would be sold on the spot market controlled by the PJM interconnection system.

This is no "brainstorm and a briefcase" plan, says Willett Kempton, a University of Delaware professor and specialist in offshore wind energy. Mandelstam, who is chairman of the American Wind Energy Association's offshore committee, previously developed the 135 MW Judith Gap wind plant in Montana, which provides 8-10% of the state's load. He was also the runner up behind FPL Energy among companies bidding to develop an offshore wind project for the Long Island Power Authority, which is still in early stages and not yet permitted.

Kempton believes the Delaware bid has a real shot based on a number of specific dynamics -- chiefly in the framework of the government mandated request for proposals. "The law says the contracts have to be for up to 25 years and meet three primary criteria: price stability, environmental improvement, and take advantage of new technology," says Kempton. "I just don't see how gas fits in there and the coal one is IGCC [Integrated Gasification Combined Cycle], which is a technology less proven than wind."

Disingenuous coal

Kempton says the IGCC bid from power giant NRG is somewhat disingenuous in its assertion that it would include carbon dioxide sequestration since NRG only aims to capture 65% of the greenhouse gas. And, more importantly, Kempton says there is no plan for storage of the sequestered gas. NRG bills their bid as one that includes sequestration, and that's true "technically," says Kempton. "I've had three geologists tell me there's no place to store CO2 on the Delmarva Peninsula, especially in this area."

The four government agencies tasked with deciding on February 28 who wins the bid are the state Public Service Commission, Delaware Department of Natural Resources and Environmental Control, the state Office of Management and Budget and the legislative controller general's office. All the agencies are in the process of reviewing the bids alongside DP&L.

When considering the project's feasibility, the agencies may question whether Delaware residents would support it. A second University of Delaware professor, Jeremy Firestone, is not in doubt. "Delaware is the Denmark of the US," he claims. Last month Firestone released the results of a public opinion study in the state showing "a very surprising high level of support for offshore wind power," he says. Firestone's study attempted to mimic a public opinion poll he conducted on Cape Cod, Massachusetts, where the much debated Cape Wind offshore project is proposed. Firestone found poor public support at Cape Cod, but he says his Delaware study shows "the picture is vastly different." Neither Firestone nor Kempton are involved in the Bluewater bid but have followed it closely as nearby researchers of the technology.

On the subject of cost, Mandelstam says: "I believe offshore wind on a lifecycle basis is the cheapest source of new generation in the eastern US because it can be located close to load centres and it eliminates transmission concerns." He pegs the total cost of a 600 MW project using Vestas 3 MW turbines at around $1.5 billion.